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06/12/2005

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The Japanese system does sound effective, but I have a hard time imagining it crossing over to American business culture, because American culture in general tends to be much more individualistic, while the Japanese view themselves and their work more collectively, as contributing to a whole. The idea of Terry S. Semel moving from CEO to an assistant VP position at Yahoo, for instance, seems ludicrous since he joined the company as CEO. There tends to be a strong cult of personality in American business (and in upper-level education), though whether it's superior to the Japanese model is an open question.

Laura

Is there any suspicion of conflict of interest in post-60-year-old Japanese execs transferring to different companies in the same field?

Tyrr

First off, Americans do enjoy their leisure time more, considering your average Japanese citizen lives in something the size of a rat cage and Americans have a lot of open space in the suburbs and especially in the country. Some people would say that they travel and Japan has a lot to do, but traveling costs a lot of money and there really isn't a whole lot of fun stuff to do in Japan that's free that old people can do or would want to do from my understanding of it. Somewhere in the viscinity of 50% of America is undeveloped, unused space if you check out maps.google.com. America has 10 times as much land per person than Japan does. It doesn't take a lot of money to drive out to a mountain or large hill, climb ontop of it, break out the lawn chair and sit ontop and watch nature. Nor does it take a lot of money to fix up old junked up cars in your garage. Do Japanese have garages or huge open spaces?

More importantly, the Japanese have a very different society. In America, work is considered boring and lengthy to some and something to be avoided as in all western societies. In Eastern cultures, work is considered an honor and is what makes a man. You have work, you are a good person. If you don't, you're lazy. If you're retired, you're considered a wise person because you've managed to survive that long.

That isn't true all around, but the culture making the decisions thinks that way.

As far as human experience goes, and what values a person should be doing with those retirement years, however, I think they can be nicely summed up in the movie Baraka. Although, several other movies comes to mind made by the same director that would also are pertinant.

http://www.spiritofbaraka.com/

The second thing I think that should be asked isn't so much how long can we work an old person. The answer is already known; it depends on their health. With the way most Americans behaive it's a wonder they live past 55. The question that should be asked is should we be working the old people? Why do they need to work that long?

I am of the opinion that the fruits industrism brought have been wasted in 2 fashons. The first is in $20 sneakers that fail after 6 months. I'v got a pair of combat boots that will last at least 6 or 7 years if I take care of them; that's how it should be. Quite simply it was wasted on bad products. Economies are based on resources, and when those resources are wasted and considered expendable, then they become precious commodities later on.

I may be young but I understand you don't waste things.

This waste has brought the cost of living up exponentially. For example, my combat boots set me back $80, and every year I need to do $10 of maintainance (polishing every 2 weeks). They are designed to last 10 years; the rubber will wear out after 2-3 and a cobbler needs to throw on a new rubber for about $30. So, in total, the cost of these boots, in 10 years, is around $300. I go out and I buy a pair of timberlands that wear our in 8 months for $60. In 10 years of doing that, I'v $900 on a footwear. More importantly, how much more work needs to be done? Laces aren't calculated because in either case I make laces out of paracord.

Did I mention my boots are water proof, chemical and electrically resistant, combat tested, have steel toes, take 10 minutes (with 2 sets of socks; wool and cotton) to put on but are laced for the rest of the day, and are the most comfertable pieces of footwear I'v ever had? These boots do *not* fail either; I don't have to deal with a month of holes or my feet being scraped up by a cruddy piece of plastic. If I want a nice pair of dress shoes I can get the same kind of boots and gloss shine them in under a day and nobody knows the difference in a suit; it also gives you an air of authority because they make a nice clunk.

Use wash-cloths instead of napkins and toilet paper

Glass plates instead of paper plates

Metal glasses instead of paper glasses

Cook your own food instead of buying cooked food (healthier too)

Get a large plot of land and seperate your garbage into 3 sections; recyclables, organics, and non-organics. Recyclables the recyclable companies can take, organics you can use for fertilizer to grow your own food, and the non-organics, well, those either go to the dump. About 10% of what we throw away is truely disposable.

The consumer culture is the first, and main, reason. The funny part is, it really doesn't take a lot of extra time either.

The second is that a great deal of the resources we've had has been wasted by the wealthy. How many manhours have we spent building, designing, and using tanks, nukes, firearms, mansions, and so on? How much of our economy is based on serving them rather than us? A great deal of wealth has been stolen by these people, where has it gone, what has it been spent on? Money is resources weither it's bricks, manhours, or greenbacks, and if it sits there without moving then it doesn't factor into the equation, so where has it been spent? I don't know, but it seems to me the toll of that would be pretty big.

TheWinfieldEffect

PENIS TAX?

One significant aspect of the Japanese retirement system is how it reflects broader political and social reality. Retirement benefits in Japan used to be linked to promoting childbirth and child-rearing -- after all, couples that raise children bear a tremendous opportunity cost.

But since women have begun to flout traditional Japanese gender roles and social expectations -- marrying later in life, not having children, living as single women into their fifties -- the benefits they draw from the system are no longer in exchange for the opportunity cost of bearing children and raising them, i.e., it's just free money. In other words, it's an income transfer from typically rural families (where women tend to marry and have kids) to typically urban singles (who tend to have more education and economic opportunity).

This has caused Japanese politicians to seek reform of the retirement system to focus benefitting families and not singles, which, of course, has angered Japanese feminists. There was a Washington Post article from not too long ago quoting a Japanese minister who noted that the retirement system had been transformed into a "penis-tax" (you bear the brunt of the tax if you have a penis; you receive a cost-free benefit if you don't).

BECKER: "The less people value leisure, the later they will want to retire and so the less money they will want to put aside for retirement."

Oddly, Japanese women as a group (because of the growing numbers of them living as unmarried middle-agers) have begun to value leisure more, but they also acquire assets like homes and cars and stocks and bonds. While those assets are not specifically retirement savings, they can certainly be used as collateral to finance retirement. At the same time, because the retirement system is still assuming that older persons have already raised children and deserve what amounts to compensation from the state, these singles get the state bundle o' cash too. The result is not a net of less retirement savings for these free riders, but a net of more (at least for the free riders).

Nathan Kaufman

Why do organizations do irrational things?

Corey

I see an awful lot of characterizing Japanese people in broad stereotypical strokes, done by people who aren't giving any justification for why they should know.

There are 125+ Million Japanese people. Many of them are passionately individualistic. (Beat Takeshi comes to mind, also as an example of the cult of personality.) It is ironic to talk about Americans as more "individualistic" in an age where the majority of the population shops at WalMart, eats only at national chain restaurants, and reads only books that have been endorsed by Oprah. After one month in Tokyo, I found Americans to be more monolithic culturally. (However, I would not assert that as a truism based on such limited knowledge of Japan)

Oh, BTW, since someone mentioned Yahoo CEO Terry Semel. Everyone should know that his compensation package added up to $230 Million last year.

Flavio Rose

A few comments. (1) The American problem with retirement financing is not so much money for older people to subsist as the exploding cost of Medicare (and wait until the drug benefit comes online!). Would it be proposed to also raise the age of Medicare entry? Then we'd essentially be pushing some part of the post-65 healthcare problem off on private employers and especially on the new class of uninsured persons over 65. We'd also raise the effective cost of hiring older people for employers who offer health insurance since the older people will continue receiving health insurance past 65. Would this further discourage employers from offering health insurance? (2) There's lots of downsizing in the American private sector. Thus later retirement implies later job searches and later spells of unemployment. Anecdotally, I see early retirement being often the result of people who are downsized giving up on finding another job. The government can't I think magically erase the reluctance of private employers to hire older people.

J R Weisser

Having lived in Tokyo for 12 years, I guess I am a bit more reluctant to speak about how wonderful the system is, though I do feel comfortable generalizing about the system.

Traditional Japanese corporations have operated on an "entering class" basis, with a narrowing pyramid as you approach the top. As such, when the bulk of the class reaches 60, it is time for them to retire. More senior management, however, moves to either run a subsidiary (with high perks and decent salaries) or becomes "executive advisor" to a company--which are sometimes valuable and sometimes not. So, in the case of Semel above, he would not retire to become an associate VP, but would instead move into a chairman or special advisor role with the company or with the board.

People lower down the food chain often have to move from something that they have presumably specialized in (questionable, given how companies tend to not to have employees specialize) move into positions which pay subsistence, and tend towards light manual labor, with a number of these positions being governmental or semi-governmental positions...While it may not be representative, I keep thinking of the "bike police" who come to "tow away" illegally parked bicycles, who are almost always men in their mid-sixties and employed by the government.

Finally, Becker, Posner, I greatly enjoy reading your work, and encourage you to keep it up.

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